Help - Fuel Card , P11D and Tax Codes?
Help - Fuel Card , P11D and Tax Codes?
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jdwoodbury

Original Poster:

1,363 posts

222 months

Friday 1st July 2011
quotequote all
Morning All,

I am looking at a new role that offers me a car allowance and a fuel card which can be used for private and business mileage (nearly all my mileage is private, approx 30k pa).

As I understand it works as follows:

- Fuel card is tied to a nominated vehicle
- The company pays all fuel costs
- At the end of the year I get a P11D showing the benefit in kind which would be the total cost of the fuel
- HMRC will adjust down my tax code removing the 40% tax element of the benefit in kind

So this year I have no BIK so I get the full personal allowance, my tax code is therefore 747L. If during the next period I spent £4k on fuel (shown on the P11D) I would see a reduction on my tax code for the taxable amount (i.e. £1600), my amended tax code would be 587L.

Can anyone confirm I have got this correct, it took me some time to piece together this information!


Eric Mc

124,044 posts

281 months

Friday 1st July 2011
quotequote all
An important thing to realise is that you are due to be taxed on the fuel benefit based on the date your employer started paying for your fuel. So, if you received the fuel card (say) on 1 June 2011, the Benefit in Kind charge will start on 1 June 2011.
The problem for HMRC is that, at this point in time, they have no means of knowing that you are now receiving a Benefit in Kind for the current tax year, 2011/12. They will only find out that you received this Benefit in Kind when the employer submits the 2011/12 P11D form - which will not be until AFTER 5 April 2012.

This means your 2011/12 Fuel Benefit will first appear on your 2012/13 Tax Coding notice. So you won't start paying the tax on the fuel until tax year 2012/13.


The only Benefit in Kind where an employer is obliged to notify HMRC WITHIN the tax year in which it starts (i.e. they need to submit the data shortly after the date the BIK started rather than wait for the submission of the P11D - which is always after the tax year has ended) is for the use of a company car. There is a special form for this called a P46 (Car).


jdwoodbury

Original Poster:

1,363 posts

222 months

Friday 1st July 2011
quotequote all
Thanks for the confirmation, I expected this would be the case. I am assuming the rest of my explanation is sound?

Eric Mc

124,044 posts

281 months

Friday 1st July 2011
quotequote all
Sounds reasonable to me.

The BIK system is messy precisely because (with the exception of company cars) HMRC does not find out the BIK you had for a particular tax year until that tax year has already ended. As I said previously, they are dependent on the employer letting them know through the Form P11D, which is always submitted AFTER the tax year has ended.

I presume the car you are using is YOUR car. On that basis, there may be scope for you to make a claim on a pence per mile basis on your Self Assessment tax return for business related mileage. The current rates are 45p for teh first 10,000 business miles and 25p for business mileage above 10,000.

Do you currently submit a Self Assessment tax return?


jdwoodbury

Original Poster:

1,363 posts

222 months

Friday 1st July 2011
quotequote all
Eric Mc said:
Do you currently submit a Self Assessment tax return?
Nope, everything is with PAYE with my current employer. I expect to do very few business miles if any at all so unlikely to claim anything back.

Eric Mc

124,044 posts

281 months

Friday 1st July 2011
quotequote all
My general philosophy is that anyone who pays tax at the higher rates (40% or 50%) should seriously consider whether they should be submitting Self Assessment tax returns.

PAYE is a very blunt and imprecise method of collecting tax from people. It only really works well for people who are -

in long term work

have only one employment

only pay tax at 20%

are not OAPs

have no other sources of income (apart from interest or dividends received)

do not have any employment Benefits in Kind

do not have allowances they need to make separate claims for (such as business mileage or other expenses in employment)

If you cannot say "yes" to these criteria, you could very well be paying too much or too little tax